TSMC Expected to Grow 31% by 2026, Capitalizing on AI Boom
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jan 10 2026
0mins
Should l Buy TSM?
Source: Fool
- Market Leadership: TSMC, as the world's largest chip foundry, is expected to achieve a 31% growth by 2026, highlighting its crucial role in the AI boom and further solidifying its market leadership.
- Value Investment Opportunity: With a price-to-earnings ratio of 25, which is lower than its peers, TSMC presents a compelling investment choice due to its strong growth potential, likely attracting more capital inflow.
- Data Center Spending Growth: Both AMD and Nvidia project that the global data center compute market will reach $1 trillion by 2030, positioning TSMC, as a primary chip supplier, to directly benefit from this trend and ensure sustained revenue growth.
- Optimistic Industry Outlook: As AI spending increases, TSMC's clients express confidence in future growth, indicating that the company will continue to perform strongly in the market over the coming years.
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Analyst Views on TSM
Wall Street analysts forecast TSM stock price to fall over the next 12 months. According to Wall Street analysts, the average 1-year price target for TSM is 313.46 USD with a low forecast of 63.24 USD and a high forecast of 390.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
8 Analyst Rating
7 Buy
1 Hold
0 Sell
Strong Buy
Current: 330.730
Low
63.24
Averages
313.46
High
390.00
Current: 330.730
Low
63.24
Averages
313.46
High
390.00
About TSM
Taiwan Semiconductor Manufacturing Co Ltd is a Taiwan-based integrated circuit foundry service provider. The Company is primarily engaged in integrated circuit manufacturing services. It offers advanced process technologies, specialised process solutions, advanced photomask and silicon stacking, and packaging-related technologies, while supporting a comprehensive design ecosystem. The Company's products serve diverse electronic sectors including artificial intelligence, high-performance computing, wired and wireless communications, automotive and industrial equipment, personal computing, information applications, consumer electronics, smart internet of things, and wearable devices.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
TSMC to Manufacture Advanced 3nm Chips in Japan
- Technology Upgrade: TSMC plans to build its second wafer fabrication plant in Kumamoto, Japan, to manufacture advanced 3nm chips, marking a significant advancement in its semiconductor manufacturing roadmap and aligning with Prime Minister Sanae Takaichi's technology ambitions.
- Increased Investment: The company is raising its total investment in the southern Japanese plant to ¥2.6 trillion ($17 billion), demonstrating strong confidence and long-term commitment to the semiconductor market in the region.
- Production Plan Adjustment: The original plan to produce 7nm chips by late 2027 has been upgraded to 3nm chips, reflecting TSMC's agility in responding to technological innovations and market demand changes.
- Market Impact: As a key chip supplier for Nvidia and Apple, TSMC's initiative will further solidify its leadership position in the global semiconductor industry and may accelerate the rapid development of related technologies.
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- New Trillion-Dollar Member: Walmart officially surpassed a $1 trillion market cap on February 3, becoming the 13th publicly traded company globally to reach this milestone, showcasing its strong competitive edge and market influence in the retail sector.
- Tech-Driven Growth: Walmart's push into online shopping and the Walmart+ subscription service led to a 27% increase in global e-commerce sales in the fiscal third quarter, enhancing customer experience and bolstering the company's long-term profitability.
- Potential Industry Leaders: JPMorgan Chase and Visa are seen as the next candidates for the trillion-dollar club, with market caps nearing $864 billion and $636 billion respectively, highlighting the stability and growth potential of the financial sector.
- Economic Cycle Challenges: While Walmart's success is notable, fluctuations in the economic cycle may pose challenges to the growth of JPMorgan Chase and Visa, prompting investors to carefully assess the market environment's impact on financial stocks.
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- AI Factory Advantage: By providing complete AI factory solutions, including GPUs and networking components, Nvidia meets the demands of large data centers, further solidifying its leading position in the AI race and supporting future growth.
- TSMC's Market Dominance: Taiwan Semiconductor Manufacturing (NYSE:TSM) is the leading chip manufacturer, with nearly 32% revenue growth in 2025 and gross margins rising to 59.9%, highlighting its unique competitive advantage in AI chip production and its plans to expand capacity and raise prices.
- Capital Expenditure Plans: TSMC has ramped up its capital expenditure budget to build more chip manufacturing facilities and has laid out a four-year price hike schedule, ensuring profitability and market share in the context of ongoing growth in the AI market.
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- Key Stock Performance: Stocks like JPMorgan, Apple, and Boeing have entered buy zones, indicating strong market performance and potentially attracting more investor interest, which could further drive up their stock prices.
- Nasdaq Weakness: While the Nasdaq index is struggling, certain AI stocks are experiencing a revival, suggesting a divergence in tech stock performance that may present new investment opportunities for investors.
- Market Sentiment Shift: The Dow's breakthrough could shift market sentiment, drawing in more investors and impacting overall market liquidity and investment strategies, thereby further propelling economic recovery.
See More
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- TSMC's Market Leadership: TSMC's stock price has surged 262% over the past three years, holding a 70% share of global processor manufacturing, and is projected to maintain its lead for the next decade, driving revenue growth of over 30% to $122.4 billion in 2025, with diluted earnings per share increasing nearly 47% to $10.65, showcasing strong profitability and market competitiveness.
- Valuation Advantage: With a price-to-earnings ratio of 31, significantly lower than the tech sector average of 42, TSMC's stock remains attractive, allowing investors to enter at a relatively cheap price while benefiting from its ongoing growth, enhancing its investment appeal.
- Google's Rapid AI Growth: Google's Gemini chatbot has seen monthly active users soar from 450 million to 650 million in just six months, indicating rapid growth in the AI sector; although it still trails ChatGPT's 900 million weekly active users, the collaboration with Apple is expected to bolster its market position further.
- Financial Gains from Collaboration: The cloud computing agreement with Apple is projected to generate billions for Google, alongside a 34% increase in cloud revenue to over $15 billion in Q3, indicating that Google is poised to strengthen its competitive edge in AI, with a current P/E ratio of just 30, further enhancing its investment attractiveness.
See More
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- Google's CapEx Boost: Google projects capital expenditures between $175 billion and $185 billion, significantly exceeding expectations, which serves as a robust tailwind for suppliers like Broadcom and Nvidia, further propelling growth in the semiconductor sector.
- Revenue Milestone: The semiconductor industry is set to reach $1 trillion in annual revenue by 2026, with global sales hitting $791.7 billion in 2025 and projected to grow by 26%, showcasing the strong demand for chips driven by artificial intelligence.
- Surging Demand Impact: The skyrocketing demand for new data center systems has resulted in substantial profits for companies like Nvidia and Micron, with the industry's growth rate surpassing earlier forecasts, indicating sustained strong demand for semiconductors.
- Long-Term Growth Outlook: Despite anticipated market fluctuations, SIA CEO Neuffer stated that the overall market continues to expand, maintaining an optimistic long-term growth outlook for the semiconductor industry, as the widespread application of AI technology continues to drive sector development.
See More
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- Technology Upgrade: TSMC plans to build its second wafer fabrication plant in Kumamoto, Japan, to manufacture advanced 3nm chips, marking a significant advancement in its semiconductor manufacturing roadmap and aligning with Prime Minister Sanae Takaichi's technology ambitions.
- Increased Investment: The company is raising its total investment in the southern Japanese plant to ¥2.6 trillion ($17 billion), demonstrating strong confidence and long-term commitment to the semiconductor market in the region.
- Production Plan Adjustment: The original plan to produce 7nm chips by late 2027 has been upgraded to 3nm chips, reflecting TSMC's agility in responding to technological innovations and market demand changes.
- Market Impact: As a key chip supplier for Nvidia and Apple, TSMC's initiative will further solidify its leadership position in the global semiconductor industry and may accelerate the rapid development of related technologies.
See More
Walmart Joins Trillion-Dollar Market Cap Club
- New Trillion-Dollar Member: Walmart officially surpassed a $1 trillion market cap on February 3, becoming the 13th publicly traded company globally to reach this milestone, showcasing its strong competitive edge and market influence in the retail sector.
- Tech-Driven Growth: Walmart's push into online shopping and the Walmart+ subscription service led to a 27% increase in global e-commerce sales in the fiscal third quarter, enhancing customer experience and bolstering the company's long-term profitability.
- Potential Industry Leaders: JPMorgan Chase and Visa are seen as the next candidates for the trillion-dollar club, with market caps nearing $864 billion and $636 billion respectively, highlighting the stability and growth potential of the financial sector.
- Economic Cycle Challenges: While Walmart's success is notable, fluctuations in the economic cycle may pose challenges to the growth of JPMorgan Chase and Visa, prompting investors to carefully assess the market environment's impact on financial stocks.
See More
Growth Stock Investment Opportunities: Nvidia and TSMC
- Nvidia's Strong Performance: Nvidia (NASDAQ:NVDA) achieved a remarkable 62% revenue growth last quarter, representing nearly a tenfold increase from three years ago, showcasing its robust performance in AI infrastructure and positioning it as a top long-term investment.
- AI Factory Advantage: By providing complete AI factory solutions, including GPUs and networking components, Nvidia meets the demands of large data centers, further solidifying its leading position in the AI race and supporting future growth.
- TSMC's Market Dominance: Taiwan Semiconductor Manufacturing (NYSE:TSM) is the leading chip manufacturer, with nearly 32% revenue growth in 2025 and gross margins rising to 59.9%, highlighting its unique competitive advantage in AI chip production and its plans to expand capacity and raise prices.
- Capital Expenditure Plans: TSMC has ramped up its capital expenditure budget to build more chip manufacturing facilities and has laid out a four-year price hike schedule, ensuring profitability and market share in the context of ongoing growth in the AI market.
See More
Dow Jones Surpasses 50,000 for the First Time
- Dow Jones Milestone: The Dow Jones Industrial Average has surpassed 50,000 for the first time, marking a significant recovery in the U.S. stock market and reflecting increased investor confidence in economic recovery, which may lead to more capital inflows.
- Key Stock Performance: Stocks like JPMorgan, Apple, and Boeing have entered buy zones, indicating strong market performance and potentially attracting more investor interest, which could further drive up their stock prices.
- Nasdaq Weakness: While the Nasdaq index is struggling, certain AI stocks are experiencing a revival, suggesting a divergence in tech stock performance that may present new investment opportunities for investors.
- Market Sentiment Shift: The Dow's breakthrough could shift market sentiment, drawing in more investors and impacting overall market liquidity and investment strategies, thereby further propelling economic recovery.
See More
Investment Potential of TSMC and Alphabet
- TSMC's Market Leadership: TSMC's stock price has surged 262% over the past three years, holding a 70% share of global processor manufacturing, and is projected to maintain its lead for the next decade, driving revenue growth of over 30% to $122.4 billion in 2025, with diluted earnings per share increasing nearly 47% to $10.65, showcasing strong profitability and market competitiveness.
- Valuation Advantage: With a price-to-earnings ratio of 31, significantly lower than the tech sector average of 42, TSMC's stock remains attractive, allowing investors to enter at a relatively cheap price while benefiting from its ongoing growth, enhancing its investment appeal.
- Google's Rapid AI Growth: Google's Gemini chatbot has seen monthly active users soar from 450 million to 650 million in just six months, indicating rapid growth in the AI sector; although it still trails ChatGPT's 900 million weekly active users, the collaboration with Apple is expected to bolster its market position further.
- Financial Gains from Collaboration: The cloud computing agreement with Apple is projected to generate billions for Google, alongside a 34% increase in cloud revenue to over $15 billion in Q3, indicating that Google is poised to strengthen its competitive edge in AI, with a current P/E ratio of just 30, further enhancing its investment attractiveness.
See More
Semiconductor Sector Approaches $1 Trillion Milestone Amid AI Boom
- Google's CapEx Boost: Google projects capital expenditures between $175 billion and $185 billion, significantly exceeding expectations, which serves as a robust tailwind for suppliers like Broadcom and Nvidia, further propelling growth in the semiconductor sector.
- Revenue Milestone: The semiconductor industry is set to reach $1 trillion in annual revenue by 2026, with global sales hitting $791.7 billion in 2025 and projected to grow by 26%, showcasing the strong demand for chips driven by artificial intelligence.
- Surging Demand Impact: The skyrocketing demand for new data center systems has resulted in substantial profits for companies like Nvidia and Micron, with the industry's growth rate surpassing earlier forecasts, indicating sustained strong demand for semiconductors.
- Long-Term Growth Outlook: Despite anticipated market fluctuations, SIA CEO Neuffer stated that the overall market continues to expand, maintaining an optimistic long-term growth outlook for the semiconductor industry, as the widespread application of AI technology continues to drive sector development.
See More
